Silver Posts Sixth Consecutive Annual Supply Deficit as Solar Demand Plunges 21%
nashnova research
Silver will post a sixth consecutive supply deficit of roughly 35 million ounces in 2026, yet solar-panel demand — the source of over half the metal's recent growth — is set to plunge 21%, turning the biggest demand engine into a drag.
Six years of deficits — why can't supply catch up?
The Silver Institute's preliminary forecast puts 2026 total demand at roughly 1.08 billion ounces, down 5% year-on-year but still 35 million ounces above combined mine and recycling supply.
This means → even as demand shrinks, supply grows even more slowly; the deficit structure is unlikely to reverse near-term.
High prices are already squeezing downstream buyers: manufacturers, jewelers, and bar-and-coin investors are all cutting usage or switching to substitutes.
Solar was silver's biggest growth engine — why is it stalling?
Over the past five years, the solar industry accounted for 55% of silver's demand growth — the single largest driver.
In 2026, solar silver demand is projected to plunge 21%, hit by slowing installation growth and manufacturers aggressively cutting a high-cost input.
Philip Newman, managing director of Metals Focus, said: "I think the historical peak in photovoltaic demand is behind us — it will continue to weaken."
In plain terms = solar used to be the star pulling silver demand higher; now it is not just stepping off the field — it is pulling in the opposite direction.
Why does BMO say the traditional deficit metric is misleading?
BMO Capital Markets challenges the standard accounting: bar-and-coin purchases are counted as "demand," yet that metal still exists as above-ground inventory and can flow back into the market when prices are high enough.
In plain terms = buying a silver bar and locking it in a vault counts statistically as "consumed," but it can be sold back at any time — that is not real consumption.
Under BMO's preferred metric — comparing only fabrication and jewelry consumption against supply — the market faces a widening surplus, requiring investors to continually absorb excess metal.
Who can pick up where solar leaves off?
Non-solar industrial silver demand is forecast to grow 4.5% this year, partially offsetting the solar decline — but its volume is far smaller than solar's former contribution.
BMO analysts project the solar segment will "give back roughly half its gains" by 2030; silver is approaching a structural inflection point.
Newman is cautiously optimistic on investment demand: "Investors have ample room to increase or establish exposure."
This reflects a shift in the market's central question — no longer "Is supply enough?" but "After solar fades, who fills the gap?"
Why has the silver price been so volatile this year?
Silver surged nearly 70% within weeks at the start of the year, then gave back the gains sharply by late January.
It drifted lower through the following months, breaking below $50 per ounce for the first time in October.
This means → the market's pricing logic is switching — from "a structural bull market driven by solar" to "searching for a new growth anchor." The volatility itself signals that consensus has not yet formed.
市场有风险，内容仅供研究参考，不构成投资建议。